October 22, 2009

The leading versions of the Public Option (a government-run health insurance option) are "level-playing field" versions, where the public option insurance plan is supported after startup only by the premiums from its policy holders. It gets no ongoing subsidy.

The only ongoing subsidies are to individuals and families for purchasing health insurance, regardless whether that insurance is private or publicly-run.

If you qualify for this subsidy, you get help to pay your health insurance premium. You can use your subsidy to buy any qualifying insurance plan (a plan that qualifies because it has no tricks or loopholes to deceive you). You get the same subsidy whether you buy a public or private insurance plan.

The other way the playing field is level is via the public option plan using "negotiated rates," where the public plan must negotiate with health care providers for what rate they are paid, just like private insurers. (The non-level rates would be rates tied to Medicare rates, such as Medicare rates + 5%.)

With these two qualities the Public Option is on a level playing field -- it has all the same conditions and limitations private insurers do, except for a need to pay profits to shareholders (because taxpayers are the shareholders!) or to pay gigantic multi-million dollar "bonuses" to executives.

One of the centrists, Senator Mary L. Landrieu, Democrat of Louisiana, said: “I am pressing to get a government-run, taxpayer-supported public option out of the bill. I want to rely on a reformed private marketplace — not the current wasteful, abusive, unaffordable private market.’’

Now, if a genuinely effective “reformed” marketplace happened, that would be great. It takes a lot of pieces. Not only risk-sharing reinsurance (to prevent the harm of adverse-selection) to last more than only 3 years, but also well-defined standard defined plans: “bronze,” “silver,” etc. that insurers must offer (to allow us to compare plans and avoid tricky loopholes), and..that insurers must price the same in and out of the exchange (to avoid tricky games by insurers to get only healthy people and avoid risky people), and…that something like the Wyden free choice amendment or similar rules would open the exchanges to more people, and…etc.

A lot of ifs are needed to establish a well-functioning reformed market that would actually work to help control costs.…

But the most telling part of Landrieu’s rhetoric (which seems political, about votes) is the phrase: “taxpayer-supported public option.”

This implication is flatly false.

The proposed public option will be supported by insurance premiums alone after startup. The subsidies are to individuals and families to help pay their premiums, whether they chose public or private insurance.

This rhetoric reveals the main trick being played politically — to intentionally confuse the subsidy to help individuals and families buy insurance for a imagined subsidy to the public option itself, a subsidy that does not exist.